tv Power Lunch CNBC October 21, 2013 1:00pm-2:01pm EDT
>> that's all right. i'm shocked. >> shocked. >> give me a final trade, doc. >> quest diagnostics. >> arbx. approach research premium basin. >> boise cascade. strong quarter. >> that does it for us today. "power" starts right now. >> announcer: "halftime" is over. the second half of the trading day starts right now. >> it's a big day for big names despite the fact that the overall indexes are hitting new highs today so far. that begs the question, where should you put your money? who is bearish, bullish, and get names of stocks that they absolutely love and loathe. and kate kelly catching up
with jamie dimon on the street. it's his only reaction so far to morgan's tentative settlement with the u.s. government. first, though, welcome back. sue at the nyse. >> thanks. it's great to be back and great to see you. a little bit of downside pressure in the stock markets. not much, though. the dow jones industrial average just moved into the green. we were down 3 1/2 points when i got down here to the nyse. s&p is just up under a point on the trading session and the nasdaq is the strongest with the nasdaq and nasdaq 100 just hitting another 13-year high. the triple q has tracked the nasdaq. etf is up a full 20% and up a third of a percent today. the russell 2000 has hit another all-time high today. it is up 35% year to date. the s&p mid-cap also hitting a new high today. it's up 30% in a year. the broader base indices are
doing well. we're going to run through names throughout the hour. let's start, though, with google, which has just turned into the negative but veisa, mastercard, american express, and nike are solidly in the green. back to you. >> sue, thank you so much. president obama addressing the website glitches that are going to become a dark cloud over the health care plan. he spoke about an hour ago. >> there's no sugar coating it. the website has been too slow, people have been getting stuck during the application process, and i think it's fair to say that nobody's more frustrated by that than i am. precisely because the product is good. i want the cash registers to work. i want the checkout lines to be smooth. so i want people to be able toll get this great product. people don't just want it. they are showing up to buy it.
nobody's madder than me about the fact that the website isn't working as well as it should, which means it's going to get fixed. >> well, cnbc.com has been conducting an unscientific survey and 86% of those respondents say that kathleen sebelius should resign over the health care mess. joining me is david. welcome back. we had you on a couple of weeks ago and, to be honest, i think we had a less productive discussion that maybe we had hoped. bertha coombs, you get the ask the first question. >> david, welcome back. one of the questions that a lot of people have is about transparency. a lot of people had hoped that the president might give us more than we had already heard about this weekend. can you give us any inkling or just who they have brought in in
terms of the tech experts? >> thanks for the question and for having me on. as the president said, we have folks from both inside the federal government as well as from outside the federal government. a tech surge to really engage in a top to bottom review, beginning to end, identify problems, isolate them, and make sure that we're fixing them and making the process as smooth as possible. i'm certainly not going to get into names of folks. >> why not, david? can you tell us, are there people coming from silicon valley? are these people who work, for example, at amazon, on retail, oracle? give us more insight. >> the companies from throughout the country, in tech and outside the tech, who have been offering their assistance have been reaching out. they have been saying, look, tell us how we can be of help. we will deploy folks. they are looking to get as many
people in with expertise to make sure we can fix these problems. so that's what we're working on. >> david, kathleen sebelius was sitting out in front today. she was not up there with the president taking ownership of this. she's not going to talk to the senate committee that's having a hearing on thursday. how come no one has been fired for this at all? robe robert gibbs said he thought somebody should be fired. why hasn't anyone been fired? >> let's focus on what is most important. what's most important is focusing on the open enrollment period that goes on -- >> i've asked two questions. why has no one been fired? will anybody be fired or is that a question for another day? if you could just focus on that. >> our focus is to make sure that the website is fixed, to identify the problems, to make sure that the american people have access to the product. that's what the american people are concerned with and that's where we're going to focus our
energies. in terms of the secretary, secretary has the full confiden confidence with the president of the united states. here's the bottom line that i think all of us can acknowledge. 20 million people, individual visitors in three weeks, over 500,000 applications, the demand is big. the product is good. the price is right. the american people want us to fix this problem so they can buy many of them for the first time, insurance they've never had. that's what we're going to do. >> david, you keep talking about these numbers. you don't quantify what the enrollments are. the president said go to a website that is not up and running 100%. what are the enrollment numbers to date and, number two, again, if you won't say that anybody is going to get fired for this, are there any contractual obligations? address the enrollment numbers
first. >> as we have said from the beginning, and you know this to be the fact both with medicare, with medicaid, job numbers, we're not doing enrollment numbers except but once a month. that's the first piece. so by the time we get to mid-november you'll have a broken down enrollment number that you'll be able to measure. here's what you need to remember with enrollment numbers. and we've been very clear about this. this is a six-month period where you ramp up over time and then the final push in march. that's the first piece. the second piece, just in terms of demand, it is unprecedented what we're receiving in terms of demand. our focus is to make sure that all of the players, from contractors, within the federal government and outside of the federal government are focused on fixing the problem. that's what we need to do. >> let me get bertha in for one more question and then i have one more question, if you don't mind. >> david, when would you like to have these problems resolved and
do you have a sense, having starting this tech surge over the weekend, as to when you can get these resolved and more people through the website? >> in terms of a road map, this is as soon as possible. we want to get these problems fixed asap. we're going to continue, like with any tech product, to identify problems throughout this process. but what we want to do is make sure in the very short term that there is a seamless flow from account creation all the way through enrollment. that is happening right now with many folks but just not with enough folks. that's obviously what our focus is going to be over the course of the next few weeks. >> david, i want to talk about communication strategy. i believe that's one of the roles that you cover for the white house. i heard president obama -- i don't mean to be disrespectful here -- who felt like he was the salesman in chief. the product is great, the price is right, go to the website and sign up. i certainly heard his frustration but i did not hear him apologize. i did not hear him turn to the american people and say, i am sorry that you have had so much
trouble doing what we hoped you were going to be able to do and that is to sign up. why didn't the president apologize expressly for this snafu? >> the president of the united states expressed his frustration and anger with the fact that not everybody who wants to go through that process has gone through. and he said very clearly, in fact, in the segment that you played at the beginning, that he's the president. when folks know that he's upset about what's happened, those problems are going to be fixed and they are going to be fixed. here's what i know about what the american people expect. especially knowing that a product like this has never existed before, they expect their government to find out what's the problem to fix it and to make sure that it doesn't happen again. that's what you heard from the leadership of the united states today and eye you should expect to hear about it again.
performance. however, there's no denying the fact that legal costs are around their neck right now. they have just increased their legal reserve and 13 of that may be coming out of their pockets to settle with the doj, sue, and yet there's still the possibility of criminal suits related to mortgage-backed securities as a part of all of this. >> kate, thank you very much. obviously mr. dimon has a lot on his plate. thanks, kate. and raising questions about
whether it's going to hurt mortgage lending, diana olick is live in washington. hi, diana. >> hi, sue. we already know credit is very site. the question is, will multibillion dollar settlements like this scare banks into tightening the purse strings even more? "we believe putting this litigation behind them will not be enough to get banks to ease mortgage credit standards." this includes apeople to repay and strict limits on how much debt a mortgage borrower can have in relation to their income. paul says that "i think jpm deals like this will tend to keep credit tight." now, the $13 billion deal reportedly gives consumers $4
billion in relief. sources that i spoke to said that they are still hashing out the details of that but it could end up being principal on interest but not in direct payment to borrowers. sue? >> diana, thank you very much. crude oil prices in focus now, below $100 a barrel for the first time since the beginning of july on increasing supply. crude inventories rose by 1% ending the week of october 11th, a gain of four million barrels. prices have been falling out of the u.s. that have been large enough to help compensate for lost output from both libya and nigeria. all this week on "street signs," in midland, texas, brian sullivan is speaking about the energy boom and our road to energy independence. also in focus today, mcdonald's stock is in the red by just a percent. they managed to beat the street
forecast by a penny. the company warned that the weak global environment could put pressure on it going forward. the stock so far year to date is down about 7%. sue, what would happen if our financial system were hacked? today we'll get some details. and before the break, a florida walmart dealing with an alligator at the front door. that will keep customers away. the six-footer hung out for a while and then scurried off into the woods. there he goes, quietly, slowly, he just needed is something there. before the break, more stocks hitting highs today. more power to you in two minutes. tdd#: 1-800-345-2550 trading inspires your life.
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welcome back to "power lunch." shares of goodyear tire prices are deflating. there's a price target of 26 bucks a share. it cited an uncertain look at profit margins because of things like new tire capacity. stock is up 54% so far this year but still the shares are near session lows. sue, back to you. >> don, thank you. disturbing new findings that hackers were able to shut down u.s. equity markets during a simulated cyberattack.
over to you, eamon. >> i love the name that you gave this. operation quantum dawn 2. there could be damage to the stock markets if there's a cyberattack. i guess what i'm wondering is, if it's so plausible, why has this scenario remained in the realm of fiction? why haven't we seen a cyberattack on markets that has caused damage yet? >> every year and every day the firms out there are spending a tremendous amount of money, time, and resources to prevent these things from happening. the reason we haven't seen it, one, because probably it could have never been thought of or second thing is we're out there every day trying to prevent it. and the whole goal behind this exercise was to try to think of a worse case scenario and to see
how all of our partners are reacting to mitigate it from occurring. >> you guys tested a massive attack on u.s. markets but i'm wondering, what about a smaller, sort of rifle shot attack designed to create billion dollars worth of damage but profits for one specific hacker. could it be so small in the scale of things that it could be unnoticed and people could be making profits now? >> it's a possibility. i think what we've learned with cyber is that anything is possible these days. the attackers that are out there, they are well-funded, focused, they've got tremendous amount of resources and any of the recent distributed service attacks happening, they are ramping it up and the firms work every day to prevent those things from happening and overall they are successful and
their goal is to make sure that we have the best markets out there, the best protective markets. >> who do you worry about, karl? who is the biggest threat? who are you worried about when you plan one of these disaster scenarios? >> well, when we look at it from a systemic nature, there's nation state. >> the chinese? >> is it could be chinese, it could be iranians. there's a lot of countries out there that would like to do the united states harm. and we're a target out there for those folks. >> karl, thank you for giving us a peak. we'd love to stay in touch with you going forward. >> same to you. >> eamon, thanks. four stocks that money managers love and hate.
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fed section trading at a fresh record high, up almost 40% this year. jetblue up 27%. delta airlines, the top-performing stock in the index this year, up 110%. >> sue, another tesector that h been on fire is defense stocks. dominic is taking a look. dom? >> with all of the talk of sequestration, the spending, the shutdown, these defense talks could be market outperforms. so far this year on a whole they have done better than the s & p 500 and that's because a slew of these big names will report earnings throughout the course of the week. you've got united technologies, lockheed martin, the biggest ones out there. they report before tomorrow's opening bell.
and then you've got boeing, general dynamics, they report before wednesday's opening bell and ratheon before thursday's opening bell. analysts will look at how well each of these companies have managed around lingering spending cuts and the threat of more to come in the future. they will also be listening closely for how each chief executive officer forecasts results and how many times, if any, they mention the spending cuts or all of the dysfunction in washington. a special attention, tyler, will be paid to just how these companies plan on growing profits. will it be more selling to international clients? if you're a trader, these defense names could be named because of those earnings catalyst. but for the prevailing sense is at least these guys have been on a great run. maybe it can continue. it will all depend on how all of their outlooks pan out. >> and none of these surprises me more in a way than boeing, up
56% year to date. given all of the problems that they had with their commercial. >> you have the aerospace and defense sides. all of these guys are going to be big focuses. >> dom, thank you very much. sue, down to you. we're bouncing off barron's big money poll when participants were asked to describe their investment outlook through 2014. 3% said very bullish. a full 65% said bullish. 24% said neutral. 8% said bearish. 0% said very bearish. we're talking to jim iurio. 65% said bullish. does that seem toppy to either one of you? >> sure. it scares me a little bit. when you're you can taing about june 2014, i'm sort of bullish. i think the next two to three months is where we're going to run into difficulties. just because we rallied on the
government being put back together, a lot of good news has been priced. >> i agree with jimmy there. due to the fact that we're seeing this premise on more fed intervention, i don't think yellen is as dumb as everyone thinks. she was the one who called the housing bubble. >> all right. let's talk stocks. first, apple. 70% of those surveyed are thumb's up. jeff, are you in or out? >> i give it a thumbs up. >> i bought apple to add to a long position. i like apple, too. i'd buy it. >> amazon, 57% thumbs up. jim, what do you think? >> it's just run too far. i'm not going to jump on board after this big move. no, i'm not going to buy that. probably closer to selling it. >> jeff? >> this is too close to halloween. but i agree with him on that as well. >> two peas in a pod today.
bank of america, 54% thumbs up. jeff? >> thumbs down. this led to the move last november. we're going to see bank of america come back here. i'm going to sell it. >> finally we disagree on something. it's been two months that bank of america has been in a consolidation pattern. more strength will couldn't institute a breakout for me. >> all right. berkshire hathaway. 70% say thumbs up. what do you think, jim? >> i think when it breaks out, it will go. other than that, i don't pay much to these analysts. >> jeff? >> take the thumbs up and stick it up his nose. coca-cola, ibm, wells fargo, some of these names have had phenomenal runs. >> well done. >> look at ibm. berkshire is coming up.
iuorio is going down. >> negative on facebook, 56% thumbs down. what do you think, jeff? >> you know i've had the hoodie on since day one, sue. >> right. >> it creeps me out that every analyst likes facebook. ad dollars are flowing to mobile. it's going to go higher. >> i don't like facebook. i kind of like facebook. i would be a buyer with a gun to my head. >> wow. >> no. it's what we do. we decide what we're going to put capital to. a little bit of facebook. >> all right. 87% were negative on tesla motors. that stock has been a phenomenal performer until recently when it had a little bit of a setback. what do you think, jim? >> it's too far, too fast. i love this company but i don't like this price. at some point in time it has to have a meaningful pullback. i'd be a seller.
>> okay, jeff? >> it's a momentum stock. 420% year to date. people are buying this car except for mr. stingy right here. >> all right. perhaps this should not be a surprise, given the controversy this year over herbalife. but 80% were thumbs down. >> it's a big hedge fund type and we haven't traded very much and it's spooky but 90% yeert to date, i don't like it. >> i don't have any interested in herbalife either. it's developing now what i call a bare flag and when it breaks out of that i'm thinking of putting a shirt on. >> netflix is the last but not the least. 63% were thumbs down. jim? >> i agree. i'm thumbs down, too. it's had a tremendous run over the past few months. to me it seems kind of toppy.
i would be thumbs down as well. >> jeff? >> right now i agree with him, thumbs down. but it's been a phenomenal stock. the original content is graining traction. they are going to be on every cable box moving forward. i want to give my thumbs up. >> thanks, guys. appreciate it very much. jeff, jim iuorio, back to you. >> let's take a look at gold and where it stands. up 13, 15, 19. there you see it. a very small move for gold today. sue? >> let's check interest rates because as the stock market has been performing well, today we have the ten-year yield holding at 1.61% and five-year is at 2.83% and the long bond, 30-year, is trading at 3.72%. you're up to date on the bond market.
all right, folks. netflix reporting earnings after the bell. remember the company's marketing blunder a few years ago, the stock got crushed because of it but it has roared back since then, up almost 200% in two years. but with more rivals insiding netflix's turf, can the company keep the momentum? that's the debate. we'll talk about it. bny mellon combines investment management & investment servicing,
welcome back to "power lunch." first solar is one of the most heavily-shorted stocks in the s & p 500. tyler, back to you. >> netflix keeps hitting all-time highs. it's hours ahead of the earnings release. up 5% today. and there you see it. look at that chart. beautiful thing. up 270 -- 277% year to date. that's amazing. two years ago it was netflix
announcing and soon abandoning plans to spin off a dvd only business. it dubbed quickster. professor of business administration at harvard's business school, what do you make of their current marketing strategy? can they sustain it? >> i think it's going to be tough. the netflix has done some very good things. it has a good subscriber growth, it has done fantastic original content, even award-winning content. but i think it is current market value is a little too high for my taste. if you look at the calculation, it just doesn't added a up. they have about 33 million subscribers. each one pays about $8 per month or let's say about $100 per year. so the value of a subscriber
over the life is not more than $1,000. and netflix says that the contribution margin is streaming at 20%. which means that a subscriber is worth about 6.5 billion. the market cap is three times that. so where is the three times growth going to come from? i'm not sure they can increase the prices given the combination of amazon and others. >> and where's the mote around their business, sunil, and do you think ultimately that what they will do is sell to one of the big cable companies or one of the big studios? >> it's possible but i think the biggest hope in my judgment is what they have done recently is trying to reach out to the cable companies to have their ad on the set-up boxes for the cable. if they can manage to do that, then they can gain a lot of
traction, get a lot of new subscribers and gain a little bit of monopoly power over the hulus of the world. i think that's the biggest hope but i'm not quite sure it's going to be that easy because it's more of a rival than a partner. >> i think the trailing p.e. is over 400. it's amazing. sunil, thank you so much. >> sure. >> sue? >> ty, get ready to work more in retirement. why 80 is the new 60. plus, college football in turmoil. could this spark a nationwide movement in sports? there are hundreds of millions of dollars at stake. that's coming up next. it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to the environment
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on friday, ge reported better than expected results that include a better back order of sales. sue, over to you. >> dom, thank you very much. 80 is the new 60. how might that impact planning for the golden years? mike ryan is here with wealth management americas at ubs. he's here to give us an exclusive look at his findings. good to he sue you, mike. >> good to see you, too, mike. >> if 08 is the new 60, we're all going to be working longer certainly but what does that make retirement look like? >> it's really interesting if you think about how we've traditionally looked at old age, it's when we retired. those who are preretirees and retirees look at a three-phase transition. first is what we call the transition phase, when you go from the retired to semiretired, the second phase is called my time, when you think of it as the golden and classic years,
leisure and travel, and then waltz, when people are dealing with how they are going to deal with their loss of independence. >> is that the main concern, your health and well-being? i know it's one of them. >> i think it's two things, sue. i think it's the need to generate income. one of the things we found in this study as well is while people identify the three distinct phases and recognize that they will have different income needs, they still underestimate the amount of income that they are going to need. they have to generate three-quarters of the income that they enjoy during their preretirement period and a lower level of income. we think income generation is going to be key and then what you just mentioned, how do i fund the health care costs because for some of us that is going to be a big issue. >> the rebound that we've seen in the housing market, a lot of times that makes people feel wealthier. does that impact their
retirement planning and the state of their retirement or not? >> it does to a certain degree but for some group of folks, the house is a critical asset. obviously it depends on your economic circumstances. what i think is the healthy takeaway from recovery and housing prices is people feel well. they are a bit more confident. the second thing is, they are more willing to engage. people had been concerned about the re-engagement markets because of the fallout from the financial crisis. it makes them feel more confident about the future and helps them re-engage because we're going to have to grow our portfolios to plan for those retirement needs. >> mike, 80 is the new 60. i guess that's good news. good to see you again. >> thank you, sue. >> 60 is the new 20, sue. >> yes, it is. >> texting while watching a movie, why one major sheet they are chain is saying, no problem. and grambling just ended
neutral, 12% bearish and 7% very bearish. hi, brian, in midland, texas. >> reporter: it's a special "street signs" from america's power play. we're going to talk about america's oil and gas boom. is it for real this time or is a bust coming? what does it mean for the political implications? opec keeping a close eye on what is happening. we have resources. we'll highlight the small and mid-cap resources. they can only come from a place the size of texas. mandy has great things as well from hq. it's going to be a great "street signs" as well as we are not bit by a snake or eaten alive by fire aunts. >> brian, thank you very. the from the place where they
specialized "the friday night lights". players from grambling have ended their strike. it's a protest being heard around the college sports world. will it have a bigger impact on college athletics? a former team captain on three nfl teams and division one college football player at the university of minnesota. he now runs his own asset management and sports advisory firm, the brewer groups. welcome back. >> this action at grambling was to strike against deplorable conditions. they are having a losing season. a far cry from eddie johnson, one of the greatest coaches of all time. there is a broader movement where college players are standing up saying we deserve some of the fruits of our labor.
where do you come down on this and do you think that's where ultimately we're headed? >> finally. i mean, any time you have a multibillion dollar organization like the ncaa and players aren't getting compensated, things like locker room conditions, you know, the feud that they are eating, the way that they are treated, this is america and that's unamerican. we're seeing a renaissance period in college sports. and now this. >> and you look at the video game settlement and all of that money and you look at how, for example, a couple of years ago rg3 was on the cover of that video game. did he see any of that money? >> no, he didn't. >> no, he didn't. look back. even when i played, i was the un of minnesota gopher. >> how should it work, in your view? should players be paid by the athletic department? should players be free to make
money off of endorsements? what should happen? >> i think they should share it. they should be compensated a little bit of money. given a kid 5, $10,000 as a stipend is not going to hurt the ncaa. >> no. there's certainly enough money to go around. the money earned from football and basketball floats the other college athletics. would you argue that not just the big money sport athletes, the basketball player kentucky, the football player in alabama should get that stipend but the girl's volleyball player at penn state should get it as well snl. >> i think it should be scaled accordingly. football should get a little more but for university
students, students come to a university because of their sports programs. you've heard of florida, florida state and others. they use sports and athletics to really publicize their university. >> let's get a quick thought of the market on these prices. is it a good time to buy or not so good? >> i think it's a good time. we're going to be at fair value. we're looking at emerging markets and other opportunities. health care in the country, there's other avenues as well. >> thank you for coming back. good to see you. sue? gentleman, madonna was recently thrown out of a movie for doing it but now one movie chain is planning a texting only row. how many people actually use twitter? the power rundown is next. tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help
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welcome back. be a better come bee and fitch are having cost-cutting margins and negative sales trends will persist and that will keep the stock side lined for the medium term. ty, back to you. >> sue and julia are with us today. 36% of those on twitter no longer use it. well, is this bad news for that company as it prepares for an ipo? this is somewhat a surprising number, julia? >> well, look, tyler. twitter said they can't comment because they are in the quiet period ahead of their ipo. it raises real questions about their growth rate. twitter has been growing its
twitter base much more slowly than facebook did when it was at the same size. it really begs the question, you know, they have 232 million monthly active users. those are people who log in every month. does this mean that they have a smaller potential base of people to expand to? because people have already tried it and then decided not to return to it? it's a problem. >> sue? >> i would totally agree. i think those are pretty startling numbers because think back, what, a year or so ago, everybody was tweeting, everybody was on twitter and it's not good news for them if 36% of those people surveyed say basically i don't use that service at all. it can't be good news. put it that way. >> facebook founder mark zuckerberg investing in his first start-up, schools that improve through data analysis and feedback in 2010. he pledged $100 million to the public schools in newark, new jersey. does zuckerberg really like education or is he investing in
future facebook users? >> i think it can be both. i think he's committed to education. he's proven that, as you mentioned, by the donation that he put to work in newark. but, you know, it's also an advantage for him to be known to those young students and i think he's doing both. i think he's trying to grow his business and invest in education. >> julia? >> look, tyler, ed tech space is very hot right now. it's an area that can really use improvement from technology. mark zuckerberg can create tools to help schools and teachers. i think it's a win-win and a particularly hot space not just for zuckerberg. >> cory booker is also maybe giving influence in that. amc planning to reportedly create a special row for people who like to text at the movies. barriers would shield light and
sound from other movie goers. regal entertainment and imax exploring this idea. julia, what do you think of this? does texting at the theater bug you? >> yes, it drives me crazy. i'm a little bit relieved. i was just at a movie on saturday and people are texting at the last minute. there was some respect once the previews ended, people stopped texting. but i just can't stand it. if they could really sequester those people at the back of the theater, go for it. i just don't want to encourage texting at movies at all. this is the one time that you can turn your phone off. >> sue? >> what she said exactly. you go to the movie to watch the movies. >> electric shock in the chairs if you touch your cell phones. that's what i vote for. guys, thanks very much. >> you're welcome, ty. we'll run you through some of the biggest winners in today's market right after this short break. peace of mind is important when you're running a successful business.
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indices, the strong one, up about 8 points. biggest winners, first solar. hasbro, rather, is up 5%. ge, after earnings last week, up two-thirds is up 3%. ty? >> sue, that will do it for us. "street signs" begins right now. we'll see you tomorrow. >> america's power play. a revolution sweeping across the country. new technologies and new visionaries redefining america's energy base, making the united states the largest energy producer in the world. a lone star resurgence with texas at the top oil and gas producers in the west, the permian basis. just a few hours east in the eagle shale